The Effect of Cash reserve on Conditional Conservatism Accounting of Companies with the Agency Cost of free Cash flow

Due to the development of stock corporations, many investors were appeared that have no direct role in their participation with managing units office. The outcome of this process was the ownership separation from management companies. The ownership separation was lead to agency issue. Indeed, agency theory proves that managers strive to maximize profits to hide bad news related to companies and report the good news, immediately. Due to the high cost of agencies, there is a risk that conservatism reduces in financial reporting and earning management phenomena is spread. This study is conducted to investigating the effect of cash reserve on conditional conservative of accounting firms that have agency costs of free cash flow in listed companies of Tehran Stock Exchange. For this purpose, by applying the condition survey, 92 companies were selected as an instance in 1385-1390 periods. The research method is a data analysis with the multiple regressions combination type using Eviews software. In the present study, the conservatism Basu index is used to measure the conditional conservatism and the interaction of free cash flow and growth opportunities are used to measure the agency costs. In this study, the agency costs are used as independent variables, conditional conservatism as the dependent variable, the cash reserve as damper variable and the market value ratio to office value. The results show that cash reserve don’t influence on conservative accounting companies that have agency flow costs of free cash.

کلیدواژه ها:

conditional conservatism ، agency costs ، cash reserve